Dividends and Updates

Happy New Year!

 

So the US did not end up over the Fiscal Cliff (we came close though).  I was not surprised that a deal would be made but was surprised with the amount of time it took for them to do something.  Anyway, we're currently not in financial Armageddon and the Stock Market moved on.

 

So here are some updates:

 

The Social Security Tax holiday ended on January 1, 2013 which resulted in smaller take home pay.  I still have to see how much impact this new development will have in my (our) investing capabilities.  I highly doubt it would affect us much but as I always say, if a 2-5% tax increase would hurt you, you're doing it wrong.  Luckily, we kept expenses are low and we built a huge emergency fund so as much as it hurt, I think we'll be fine financially speaking. 

 

To offset the loss of a few hundred dollars, I'm happy to report that our portfolio got paid some dividends.

 

On 01/14/2013, Mondelez paid $1.53 in dividends.  It was reinvested and bought 0.0558 shares of MDLZ at $27.42/share.  On the same day, Kraft also paid dividends.  We got $1.96.  It was reinvested and bought 0.0423 shares of KRFT at $46.34/share.

 

Also, on 01/10/2013, Altria paid $4.71 in dividends.  It was reinvested and bought 0.1476 shares of MO at $31.91. 

 

Granted these dividends are small peanuts compared to the "lost" take home pay but over time, these reinvested dividends would compound and make us more money in the long term.  Besides, it's better than nothing.

 

By the way, I'm not concerned with Apple's over 200 point drop.  As long as Apple manages to use or save  the over $150 Billion dollars in cash in the bank, I am confident they will find a way to release more exciting products either by in-house development or through acquisitions.  But we'll have too see with their earnings call next week.  I have a feeling that even if Apple bottoms out at $400, it would just be a perfect buying opportunity to get more shares and we'll have to have on as it goes back up to around $600.  Besides, the stock is still cheap compared to it's competitors.

 

Meanwhile, I'll keep investing in other sectors that would hedge the current hatred with Tech Stocks.

 

More to follow!

 

Playing Defense, New Dividends and Split Companies - A Year-end post

It has been a while since I posted something substantial concerning the portfolio.

 

I have been busy with work, co-planning (more like following) the honeymoon and multiple life events that will not be discussed in this post.  Suffice to say, I have been delinquent with my posts and for that, I apologize.

 

Now, with that out of the way, let's get on to business.

 

These days, the Market has been pummeled by the whole Fiscal Cliff discussion.  For those not in the know, if the US Government fail to come up with a deal to fix the budget deficit, there would be a catastrophic sequence of events that might bring the US back into a recession.  Automatic cuts in services, Defense and across the board tax hikes would probably spell disaster not only for the US but for the global economy as well.  That is why we've seen a lot of CEOs, insiders cashing out their stocks to take advantage of the current capital gains tax rate which in my opinion explains why high-flying stock such as Apple (AAPL) dropped so much in recent weeks.

 

Nonetheless, I think playing defense against a possible sell off/crash would be a prudent course of action which brings me to my last move for the year.

 

As you may know, I stocked up on my cash position in preparation for a possible Mitt Romney win in November.  I wanted to be in a position to buy GOP/Wall St-friendly stocks such as Defense Stocks (Lockheed Martin) and the Financials (the banks).  However, Mr. Obama managed to sneak in a win (good news/bad news, I'll leave that to you.  This is not a political blog) and the current status quo was maintained.  I left my cash reserves alone until after my honeymoon while I collect and analyze the data, news and trends from afar. 

 

Now, I have made my decision, I decided to use the $500 I have from the reserves to buy the GLD ETF.  The order was executed today (12/18/2012) and with the $4 fee (automatic investment), I got 3.0255 shares of GLD at $163.94/share.  The GLD is my hedge in case the US does go off the so call Fiscal Cliff where taxes would go up, the economy would go back into recession and stocks would drop.  The GLD would be my firewall in case my portfolio would take a hit and it would also be prudent to bring up my GLD position closer to the recommended 20% of my portfolio (It is currently at 16.7% including today's purchase).   Eventually, I want my AAPL position at around 10-15% of my portfolio (currently at 23%) and the rest of my positions at roughly 10-15%  so that I would not be heavily affected by the now "volatile" Apple stock.

 

In other news, I have received dividend payments since my last post.  It is safe to say, at least my portfolio was "working" on it's own.  Here's the breakdown:

 

Altria (MO): 10/10/2012 = $4.65 -> 0.1387 shares at $33.53.

Ex-Dividend Date: 12/21/2012 and Dividend Date: 01/09/2013

 

Waste Management (WM): 09/21/2012 = $4.19 -> 0.1287 shares at $32.56

                                           12/14/2012 = $4.24 -> 0.1260 shares at $33.65

 

Xilinx Inc. (XLNX): 08/29/2012 = $1.98 -> 0.0585 shares at $33.85

                               11/28/2012 = $1.99 -> 0.0584 shares at $34.08

 

Energy Transfer Partners (ETP): 08/14/2012 = $9.71 -> 0.2223 shares at $43.68

                                                 11/14/2012 = $9.91 -> 0.2354 shares at $42.10

 

Apple (AAPL): 08/16/2012 = $5.69 -> 0.0090 shares at $632.22

                        11/16/2012 = $5.71 -> 0.0106 shares at $538.68

 

Kraft (KFT -> KRFT + MDLZ): 07/17/2012 = $3.39 -> 0.0854 shares at $39.70

                                                   10/15/2012 = $3.42 -> paid to the cash fund which is possibly taxable.

 

Kraft did something special this year.  It broke up the company into 2 different companies which resulted in me having the following stock positions:

Kraft Foods (KRFT) = 3.9261 shares

Mondelez International (MDLZ) = 11.7784 shares

 

KRFT Ex-Dividend Date: 12/27/2012 and Dividend Date: 01/13/2013

MDLZ Ex-Dividend Date: 12/27/2012 and Dividend Date: 01/13/2013

 

KRFT will be the North American Grocery Division which will carry the Velveeta, Miracle Whip and Oscar Meyer brands.

MDLZ will be the Global Snacks Division which will carry the Cadbury, Milka, Oreo and Nabisco brands.

 

So far, both companies are performing well and upon further review, I would decide which of the two I would focus on. 

 

That's it. 2012 is over and the portfolio has survived the Elections, a Tech downturn and even the Apple sell off.  Not at all bad even though I could have locked in my Apple gains 3-4 months ago.  But there is no use reviewing the past.  I am still bullish on Apple and next year could be a big one for Apple with China, the rumored Apple TV set, the iPhone 5s and a possible refresh of the iPad.  If there is one thing I want Apple to deliver for next year it would be a more innovation iOS 7.  In as much as I love the iOS software, it would not hurt to have more innovation in the software and increase their lead from the Android OS.

 

With that, I would like everyone to have a happy holidays.

I'm not gone. I'm just busy.

Hey,

I know I have been absent for some time.

I've been busy at work among other things.

Anyway, since my last post, AAPL has paid me dividends and I think XLNX did too.

I'll be back with more updates soon.  I'm currently building up my cash position in preparation for the results of the US Presidential Elections in November.

See you soon!

Being Wrong and Owning Up

I was wrong with my LULU prediction from last week.

LULU closed at $54.40 today.

Oh well, I never said I'm a Wall Street expert.  Besides, even if I did the automatic investment plan, there is no guarantee at what price it would execute.  Also, it would only gain me maybe a quarter of a share more.

No regrets.

What makes me feel better is that I still see a lot of women wearing Lululemon apparel on the street.  So I am good. :P

Smoking Hot Dividends and the Hot Summer

The good old Big Tobacco company Altria (MO) just paid me a dividend.  I got paid $4.28 which I then reinvested to get 0.1217 shares at $35.17.  

As much as I was disappointed that Prop 29 failed, it is nice that I still profited from Big Tobacco's win.  For the uninformed, Prop 29 would have imposed a $1.00 tax on each pack of cigarettes sold in California.  Supporters claim that the additional tax would have paid for cancer research, tobacco law enforcement and smoking reduction programs.  As one might expect, Big Tobacco spent $46.8 Million (Altria/Philip Morris alone spent $27,531,416 - full disclosure).  Far outspending Prop 29 supporters' $12.3 Million.  The silver lining for anti-smoking supporters is that it was a tight race: 50.3% No vs. 49.7% Yes. The fact that the difference of 0.6% was all the extra $34.5 Million could buy, perhaps they'll be more successful next time. 

Now I bet I'm confusing some people with my 2-sided position.  How can I own tobacco stocks (MO) and yet support a ballot measure that would severely affect the Tobacco Industry?  Simple, I want a cure for cancer.  If the additional $1.00 tax would bring us closer, then so be it.  I also believe that smokers would not stop smoking even if they have to pay an additional dollar per pack of smokes.  They are too addicted to smoking and it would be a hard habit to break.  Either way, I'll still profit for the habit of addiction.  

In other news, I just posted a LIMIT order for 5 shares of Lululemon.  Yes, I did a limit order instead of my usual Automatic Investment tactic.  So what did I get for the extra $5.95 in fees?  Well, I got 5 shares of LULU at $55.90 (currently LULU is at $55.85 - 8:36AM).  I do not think waiting till next Tuesday for the order to post would have made the difference.  I believe LULU will be higher than $55.90 by next Tuesday. I would rather pay a bit more in fees to catch the downward movement now than save the $5.95 only to ride the possible rally next week.  I'd rather be wrong and next week and still end up with 5 shares of LULU than be right and end up with less than 5 shares of LULU.

So here is my Lululemon thesis:

LULU peaked at $80.30 on May 3, 2012 (52-week high of $81.09) and has been moving down since then.   I believe LULU has been dragged down by the Euro crisis.  I believe this decline would reach the bottom soon and LULU, along with it's athletic retail competitors would experience a boost during the summer months and of course, the Olympics.  I am confident this would happen because of what I've been seeing on the streets and at the gym.  People are out and about walking in the streets, working out and trying to get fit.  I still see a huge number of LULU gear on women and some men.  LULU's business model and their steady expansion in North America would be enough for them to keep growing and put money back in my pocket.

The summer Olympics would be another catalyst I'm looking at.  Fans would be watching the world's best athletes and would be "inspired" to buy some athletic apparel.  Sure, Nike, Reebok and Addidas would take the lion's share of the new active wear purchases but I believe the Lululemon brand would start capturing new customers.  If LULU managed to sponsor at least 1 medal winner, this could be big boost for LULU.  Even if the athlete wore Nike or Reebok during the events, if those athletes start wearing Lululemon for their other activities... like yoga sessions perhaps, LULU would be poised to benefit from this.  Only time will tell.

One more thing about LULU.  I have noticed that the women who wear Lululemon yoga pant also wear those pants as part of their daily apparel.  It is almost like what happened to UGGs (Deckers - DECK).  I would not discount the possibility that Lululemon apparel would become more than just yoga pants and workout gear.  It may even become an UGGs-style phenomenon.  However, unlike UGGs, LULU yoga pants look great and even if the yoga wear as daily wear trend dies down, people women would still need to buy yoga pants for their yoga sessions.  

With these points in mind, I predict LULU would do the head and shoulders movement and would rise back up to it's $80-$90 mantle within the next 12-16 months.  So yes, I am long term investor of LULU.

Dividends and the Europe Recession

First some portfolio updates:

Since my last post, I have received dividend payments from Xilinx Inc. and Waste Management.

Xilinx Inc paid me a total of $1.97 in dividends which I reinvested and bought 0.0618 shares at $31.88.

Waste Management paid me a total of $4.14 in dividends which I reinvested and bought 0.1277 shares at $32.42.

On deck is Kraft (KFT).  Tomorrow is their Ex-Dividend date (06/27/12) and I'm speculating a dividend date sometime in July or August.

I recently became aware of a Real Estate Investment Trust (REIT): Realty Income Corporation (Ticker symbol: O).  What struck my fancy was the monthly dividend payments this REIT pays.  It's current dividend yield pays at 4.40% and has been up about 3 points since I got introduced to it.  

On the surface, this looks like a great investment but I still have to do my homework (and accumulate enough capital to buy a sizable position) to see if the monthly dividend is worth having another position to manage.

Meanwhile, Europe has been pulling the global economy down... at least it feels that way.  Spain and Greece are currently experiencing what the US had gone through in 2008.  Basically, all the US can do is wait and hope that Europe would figure out a way to fix this recession.  

I'm just happy that my portfolio and retirement accounts have managed to survive this Euro situation.  I'm sad that I currently don't have enough capital to double down on my positions and mutual funds (car repairs would do that).

Hopefully this would be an opportunity for me to keep buying while everyone seems to be selling.  Good times for the bullish!

Dividend Payments and the Facebook IPO Fizzles

My favorite natural gas position just paid me a dividend.

ETP paid me $9.53 (May 15, 2012) which I reinvested back to get 0.2065 shares at $46.15.

I really love dividends.

Just an update, XLNX's Ex-Dividend date was May 14, 2012.  Dividend date is on June 5, 2012.

Now for the news of the day...

Unless you've lived under a rock for the past few weeks, you would know that the Market has been tanking due to the reported European woes that focused on austerity measures and the possible Greek bank defaults.  

A lot of people may be worried and panicking while I am grinning from ear to ear because this massive sell-off may just give me another chance to buy more stocks for our stock portfolio.  It also inspired me to get more shares of my mutual funds for my Roth IRA.  Europe may be in trouble but as long as the USA does not collapse along with our European brothers and sisters, I'm very optimistic that this "bear" market is the second chance I've been praying for some time.

In other news, there's this small social networking company that went IPO today.  

Facebook (FB) was priced at $38/share and opened at $42.  The initial pop went up as high as $45 but that quickly dropped to just over $38.

Currently, FB is holding steady at $40-$41 (as of 11:41 am PST).  

My brother asked me if I'll buy FB today.  He even told me he can spare $10,000 to buy at the opening only to sell it at the end of the trading day.  I declined his offer and told him that I think FB was overpriced and that I do not invest in companies that does not show a positive cash flow (FB has yet to report their financials publicly... I'll check again later).  

With only an hour of trading left, I think I just saved my brother $10,000.  Can you imagine if I took his $10,000 and bought FB at the opening price of $42?  I would have lost him $476!  I guess I turned out to be a financial genius this time.  

Jim Cramer had warned his viewers to avoid FB in the after market (at the opening $42 valuation).  He also said that at $38, FB was way overpriced and that they should have kept the price at around $28-$30.  

Comparing FB to LinkedIn (LNKD).  LNKD opened at $45 and closed at $94.25.  LNKD outperformed FB's performance on IPO day.  There was even a time that LNKD was over $100 (Today, LNKD is at $100.18).  

What went wrong with Facebook?

Here a short video from the LA Times: 

I think the delay of the initial trading (I checked at 7am today and there was no info on any FB trading), high IPO price, GM pulling out of Facebook ads, Eduardo Saverin renouncing his US Citizenship to allegedly avoid taxes and the high amount of stocks being sold (trading volume) hurt Facebook (FB).  I guess the massive hype did not help FB and it probably disappointed a lot of investors.  I took a bet that the upside of getting the IPO will not make up for the downside of the IPO disappointing Wall Street.  I could not afford losing that much over a profit so insignificant the fees and taxes alone would eat it.  

This time, I was right.